The market struck a one-day reversal to the upside yesterday with all four of the market averages listed above closing near their highs for the day after a sharp sell off.

That suggests Wall Street is not yet convinced it needs to find a lower comfort level for stock prices to discount disappointing Q1 results.

Today: A mixed open with a slight upside bias. Overhead supply starts at DJIA 12,320 (S&P 500: 1318). There is a more formidable resistance level at DJIA: 12,375 (S&P500:1322). A string of better-than-expected earnings would render these levels meaningless, resulting in new bull market highs .

What we have here is an uncertain market capable of a run in either direction, given a better read on Q1 earnings. Bears have a slight edge, given other lurking uncertainties and a market that is a bit top-heavy, short-term.

Soaring commodity prices have stoked fears of inflation with good reason, higher raw material prices can crimp corporate margins as only part of the cost can be passed through to the consumer in an economy that is still fragile and in recovery mode.

The Consumer Price Index for March was reported at 8:30 and showed an increase of 0.5 percent vs the same for February. However “core” inflation ( excluding food and energy) was up less than expected for the period, plus 0.1 percent vs 0.2 percent a month ago. These numbers are actually through the 11th of the month, not month-end.

The Empire State Manufacturing Index jumped sharply to 21.7 from 17.5 indicating the New York region’s factories are gaining traction.

George Brooks
sensiblesleuth@gmail.com

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